FIRSTfactor
FINANCE
0845 643 4611
Working Capital Specialists

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ADVANTAGES OF FACTORING

Making use of a Factoring service can improve your bottom line

Improved cash flow by releasing up to 90% and in some cases 100% of funds tied up in outstanding debtors. By making use of a Factoring facility you can benefit from improved profitability Factoring can improve profitability as the business can buy in larger quantities at reduced costs, pay suppliers earlier, and take advantage of early settlement discounts that are available. as you can pay suppliers earlier, buy in larger quantities and take advantage of any volume discounts available. However there are more benefits to factoring than just the head line additional injection of working capital, customer relations and cash flow can be improved with the use of Full Factoring.

With Factoring, the responsibility for administering and collection of your sales ledger rests with the Factoring company, therefore a business no longer has to pressure its customers for payment on overdue accounts. Knowing exactly when you are going to be paid makes financial planning so much easier. When customers are aware that a Factoring Company is involved, customers may even pay their bills more promptly improving your cash flow. Since the Factoring companies may also be handling accounts for several other of their suppliers, customers will be careful not to jeopardise their credit rating, as non-payment to one supplier may immediately damage their rating with others. Factoring may even save your Company money. Many firms are not able to duplicate their services offered by a Factoring Company on their own for the same cost.

THERE ARE SEVERAL OTHER ADVANTAGES TO FACTORING

Improving your cash flow

In addition to the obvious advantage of accelerated cash flow, there are several other advantages to Factoring:

  • Factoring can be a cost-effective way of outsourcing your sales ledger management and credit control while freeing up your time to manage the business

  • Credit investigations into your debtors. Factoring Companies deal with thousands of debtors and build up payments profiles

  • There are many Factoring companies in the market, so prices are usually competitive is about selecting the right one making it a cost effective option

  • Collection of past due accounts. Factoring companies will have more clout with slow paying debtors

  • Working capital is released as soon as orders are invoiced and is available for capital investment or funding more sales. Factoring finance can keep up with you growth

  • Record keeping, and all related accounts receivable costs may be significantly higher if a firm must expand its own credit department or use an outside collection agency

  • Freed of credit and collection problems, a company can concentrate its efforts on increasing profitability

  • A company using Factoring can often obtain more credit information on new customers more quickly

  • Factoring Companies may be able to increase a company's sales volume by advising it of other potentially desirable customers

  • Some customers may respect Factoring Companies and pay more quickly that they would normally pay you

  • Factoring can prove an excellent strategic as well as financial resource when planning business growth

  • Factoring can also protect your business from bad debts if you choose non-recourse Factoring

  • No long-term contracts, you can Factor as much or as little as required depending on the type of Factoring facility

  • Individual invoices and customers to whole sales ledgers can be Factored

  • Cash on hand allows opportunities that present themselves to be taken

Who can benefit from Factoring?

Factoring is a safe and commonly used by businesses

Sole Traders, Partnerships, Limited and Public Liability Companies can all take advantage of a Factoring service. Only business-to-business transactions can usually be Factored. Factoring Companies can also provide a company with other complementary services such as letters of credit, stock finance, asset finance, work in progress finance and import & export financing.

Factoring can improve profitability as the business can buy in larger quantities at reduced costs, pay suppliers earlier, and take advantage of early settlement discounts that are available.

Businesses that have season demands, large one off orders, need to offer customers extended credit or broaden product ranges for example can all benefit by using Factoring.

Factoring is a safe and commonly used way to help working capital keep up with your business. Factoring is becoming a common practice for many small or rapidly growing businesses. Factoring is faster, and a simpler method of acquiring working capital when compared to a traditional Bank loan.

If you are looking for a cost effective flexible way to raise money for your growing business Factoring should be strongly considered. We have helped hundreds of businesses raise funds against the value of outstanding invoices to dramatically improve cash flow. Factoring is often key to delivering high growth and backing innovation, but securing it can be a challenge.

Contact firstfactoruk.com we are here to help.